GOLD: Elliott Wave and Technical Analysis | Charts – June 4, 2021
More downwards movement was expected to end about 1,854 to 1,845, but the target zone was too low. Downwards movement ended at 1,861.17 before a strong reversal closed the candlestick for Friday green.
Both Elliott wave counts remain valid.
Summary: The main wave count is bullish. The next mid-term target is at 1,923. The longer-term target is at 2,094 although this may need to be revised higher.
An alternate Elliott wave count is considered. The next target zone for upwards movement is at 1,940 to 1,941.
Grand SuperCycle analysis and last monthly charts are here.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART
This wave count sees the the bear market complete at the last major low for Gold on 3 December 2015.
If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart.
Cycle wave I fits as a five wave impulse with reasonably proportionate corrections for primary waves 2 and 4.
Cycle wave II fits as a double flat. However, within the first flat correction labelled primary wave W, this wave count needs to ignore what looks like an obvious triangle from July to September 2016 (this can be seen labelled as a triangle on the second weekly chart on prior analysis here). This movement must be labelled as a series of overlapping first and second waves. Ignoring this triangle reduces the probability of this wave count in Elliott wave terms.
Cycle wave IV may be a complete triple zigzag.
If the third zigzag of primary wave Z continues lower, then cycle wave IV may not move into cycle wave I price territory below 1,303.51.
DAILY CHART
Cycle wave IV may be a complete triple zigzag.
A target is calculated for cycle wave V. If this target is wrong for this wave count, then it may be too low. As price approaches the target, if the structure is incomplete, then a higher target may be calculated.
Primary wave 1 within cycle wave V may be incomplete.
Within primary wave 1: Intermediate waves (1), (2) and (3) may be complete.
Intermediate wave (4) may today be complete as an expanded flat. It may also continue lower to find support about the lower edge of the Elliott channel.
Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,739.19.
HOURLY CHART
Intermediate wave (4) may be a complete expanded flat. Expanded flats are common corrective structures.
There is no Fibonacci ratio between minor waves A and C.
Intermediate wave (5) may have begun. Minor wave 2 within intermediate wave (5) may not move beyond the start of minor wave 1 below 1,861.17.
Intermediate wave (5) may continue for a few more sessions. The target calculated expects intermediate wave (5) to exhibit the most common Fibonacci ratio to intermediate wave (1).
ALTERNATE ELLIOTT WAVE COUNT
WEEKLY CHART
The bigger picture for this alternate Elliott wave count sees Gold as still within a bear market, in a three steps back pattern that is labelled Grand Super Cycle wave IV on monthly charts. Grand Super Cycle wave IV may be subdividing as an expanded flat pattern.
Super Cycle wave (b) within Grand Super Cycle wave IV may be a complete double zigzag. This wave count expects Super Cycle wave (c) to move price below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation and a very rare running flat. The target calculated expects a common Fibonacci ratio for Super Cycle wave (c).
Super Cycle wave (c) may have begun with a leading expanding diagonal for primary wave 1. Leading expanding diagonals in first wave positions are uncommon, so the probability of this wave count is reduced. However, it has a good fit and must be considered.
Second wave corrections to follow leading diagonals in first wave positions are usually very deep. Primary wave 2 may be expected to end at least about the 0.618 Fibonacci ratio at 1,920.42, and more likely a reasonable amount deeper than that. Primary wave 2 may not move beyond the start of primary wave 1 above 2,070.78.
DAILY CHART
Intermediate wave (C) may be subdividing as an impulse. Minor wave 4 within intermediate wave (C) may now be complete as an expanded flat.
The target for intermediate wave (C) is now calculated at a a second wave degree, so now it widens to a zone.
No second wave correction within minor wave 5 may move beyond the start of its first wave below 1,861.17.
The channel is redrawn using Elliott’s second technique, because minor wave 4 breached a channel drawn using the first technique. Draw the first trend line from the ends of minor waves 2 to 4, then place a parallel copy on the end of minor wave 3. Minor wave 5 may end either mid way within the channel or about the upper edge. When the channel is breached by subsequent downwards movement, then it may then be used to indicate a trend change.
TECHNICAL ANALYSIS
WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The upwards trend may have ended, for now. There is no bearish candlestick reversal pattern and the trend did not reach extreme. Pullbacks or consolidations here may be more short term in nature.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
With ADX indicating the prior upwards trend reached very extreme and RSI reaching overbought, a strong Bearish Engulfing pattern now has support from volume. This indicates a trend change here.
A downwards session now closes green with a bullish long lower wick. RSI and ADX are no longer extreme. But if an upwards trend develops again here, then it would very quickly reach extreme and therefore be limited.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
Next resistance is at 45.55.
An Evening Doji Star may be a reversal pattern, but the third candlestick does not have support from volume and the last Evening Doji Star was not followed by a trend change.
If ADX indicates an upwards trend soon, then it would be in an early stage; there would be a long time and distance to go before it may become extreme.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
The breakaway gap at 39.34 may offer resistance. Price may continue to fall to support at 37.50.
Published @ 07:38 p.m. ET.
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